CHAPTER Present effect of negligence or fraud. Title of an agent. Pledging bills payable to bearer. Other instru ments payable to bearer. one of several thousands? More caution is required in the case of a discounter than of a payer" (a). But it is now settled, that if a man takes honestly an instrument made or become payable to bearer, he has a good title to it, with whatever degree of negligence he may have acted, unless his gross negligence induce the jury to find fraud. "I believe," says Lord Denman, "we are all of opinion that gross negligence only would not be a sufficient answer by the defendant where the plaintiff has given consideration for the bill. Gross negligence may be evidence of mala fides, but it is not the same thing. We have shaken off the last remnant of the contrary doctrine” (b). If the party presenting a bill or note payable to bearer be the mere agent of another, the agent's title is infected with the infirmity of his principal's title, although the principal is in the agent's debt; and the agent consequently cannot enforce payment of the maker (c). It makes no difference that the bill or note is only pledged, and not absolutely transferred; the pawnee acquires a property in it (d), and is not liable in trover, to the real owner, as in the case of goods improperly pledged (e). Exchequer bills, which are payable to bearer before the blank is filled up (f), bonds of foreign princes and states (a) Query, whether this last proposition is not now incorrect? (b) Goodman v. Harvey, 4 Ad. & El. 870; 6 N. & M. 372, S. C.; Uther v. Rich, 10 Ad. & E. 784; 2 P. & D. 579, S. C. In the case of Goodman v. Harvey, the bill bore on it, when discounted, the notarial mark of non-acceptance. To use the words of the Lord Chief Justice, "the plaintiff received the bill with a death wound apparent on it." See also Backhouse v. Harrison, 5 B. & Ad. 1098; 3 N. & M. 188; Crook v. Jadis, 5 B. & Ad. 909; 3 N. & L. 257, S. C.; Foster v. Pearson, 1 C, M. & R. 855; 5 Tvr. 255, S. C.; Willis v. Bank of England, 4 A. & E. 21; Raphael v. Bank of England, 17 C. B. 161; Carlon v. Ireland, 5 E. & B. 765; Bank of Bengal v. Fagan, 7 Moore, P. C. C. 72. (c) Solomons v. Bank of England, 13 East, 135; 1 Rose, 99, S. C. As to agent transgressing his authority, see Watson v. Russell, 34 L. J., Q. B. 93. (d) Barber v. Richards, 20 L. J., Exch. 135. (e) Collins v. Martin, 1 Bos. & Pul. 648; 2 Esp. 520, S. C. See as to lien of banker, post. (f) Wookey v. Pole, 4 B. & Ald. 1; see as to dividend warrants, Partridge v. Bank of England, 13 L. J., Q. B. 281, and 9 Q. B. 424, in error; and see further as to Exchequer bills, Barnett v. Brandao, 6 M. & G. 630; Brandao v. Barnett, 3 C. B. 519. In the state of Georgia it has been held, that any bond payable to bearer is a negotiable instrument, Byles on Bills, 5th American edition, p. 281. payable to bearer (g), and East India bonds (h), resemble money and bills of exchange payable to bearer, in the necessary union of possession and property. Honest acquisition confers title (i). CHAPTER XI. A metallic token, like an IO U, should seem at common Metallic tokens. law to be only evidence of a debt. Though intended for circulation it can therefore at common law give no right of action to a transferee. But the issuer of tokens made of mixed metals, compounded partly of gold or silver, was formerly liable to the holder (k). The issuer of a token, made wholly or in part of copper, is liable only to the original taker (1). The issuing of tokens made partly of gold or silver was restrained by the 53 Geo. 3, c. 114 (now repealed by the 24 & 25 Vict. c. 101), and the issuing of tokens made wholly or partly of copper by the 57 Geo. 3, c. 46. Tokens into the composition of which neither the precious metals or copper enter, seem left to the common law. Wages of artificers, however, cannot in certain trades, even by consent, be paid in tokens (m). Seventhly, as to transfer under peculiar circumstances. TRANSFER UNDER PECU- Before bill filled An indorsement may be made even before the bill or note itself, and so render the indorser liable to subsequent parties to any amount warranted by the stamp. The plaintiffs were up. bankers, with whom one G. had dealings. They refused to let him have more money, unless he procured them the indorsement of a third person. G. accordingly induced the defendant to sign his name across the back of four blank forms of promissory notes. G. then filled them up, and delivered them to the plaintiffs, who knew the notes were blank at the time of the indorsement. The notes were not paid by G., the maker, and the plaintiff's called on the defendant as indorser. Lord Mansfield: "Nothing is so clear, as that the indorsement on a blank note is a letter of (g) Gorgier v. Mieville, 3 B. & C. 45; 4 D. & R. 641, S. C.; Jones v. Peppercorn, 28 L. J., Ch. 158; 1 Johnston, 430, S. C. (h) 51 Geo. 3, c. 64. (i) The embezzling of bills by agents, or pledging them beyond their lien, is a misdemeanor punishable by penal servitude or im prisonment, 24 & 25 Vict. c. 96, (k) 53 Geo. 3, c. 114, s. 3. This (1) 57 Geo. 3, c. 46. CHAPTER After refusal to accept, where the transferee has notice of the dishonour. Where the transferee has no notice. credit for an indefinite sum. The defendant said, 'Trust G. to any amount, and I will be his security.' It does not lie in his mouth to say the indorsements were not regular" (n). An indorsement may be made either before or after acceptance. If a bill be indorsed after refusal to accept, and notice thereof to the indorsee, or after it is due, these are circumstances which may reasonably excite suspicions as to the liability or solvency of the antecedent parties. An indorsee, therefore, of a bill dishonoured or after due, with notice thereof, has not all the equity of an indorsee for value in the ordinary course of negotiation. He is held to take the bill on the credit of his indorser, and has no superior title against the other parties (o). Drawer requested defendant to indorse two bills for his, the drawer's accommodation. He accordingly drew two in favour of the defendant, which defendant indorsed and gave up to him. These bills the drawer then gave to A., and A. signed an agreement with defendant, that if one of the bills were paid, the defendant should be exonerated from the other. One of them the defendant accordingly did pay. The other was presented for acceptance and dishonoured; it was, after this, indorsed by A. to the plaintiffs, with notice of the dishonour. On payment being refused, plaintiffs sued defendant. Held, that the plaintiffs, having taken the bill after notice of dishonour, took the title of their indorser, and that, as the agreement would have been a defence to an action at the suit of A., it was a defence also against the plaintiffs (p). But if the indorsee had no notice of the dishonour, he is not prejudiced by it. Payee presented a bill for acceptance, which was refused. He neglected to advise the drawer, and thereby discharged the drawer as between the drawer (n) Russellv. Langstaffe, Doug. 496; and this seems to be the law in America, though the amount of liability is not there limited by any stamp laws; Byles on Bills, 5th American edition, pp. 282 and 307; Usher v. Dauncy, 4 Camp. 97. A bill may be indorsed before the day of its date. Passmore v. North, 13 East, 517; and see Smith v. Mingay, 1 M. & Sel. 87; Cruchley v. Clarence, 2 M. & Sel. 90; and see 17 Geo. 3, c. 30, s. 1; and Schultz v. Astley, 2 Bing. N. C. 544; 2 Scott, 815; 1 Hodges, 525, S. C. See acceptance on a blank stamp, post, Chapter on ACCEPTANCE. (0) But as to a bill payable to bearer, see Goodman v. Harvey, 4 Ad. & El. 870; 6 N. & Man. 372, S. C.; Raphael v. Bank of England, 17 C. B. 161; Carlon v. Ireland, 5 E. & B. 765. (p) Crossley v. Ham, 13 East, 498. and himself. He then indorsed the bill without informing his indorsee of the dishonour. Held, that the discharge to the drawer extended only to an action at the suit of the party guilty of the neglect, and that the indorsee having had no notice of the dishonour, the same defence was not available against him as against his indorser (q). CHAPTER "After a bill or note is due" (r), says Lord Ellenborough, After due. "it comes disgraced to the indorsee, and it is his duty to make inquiries concerning it. If he take it, though he give a full consideration for it, he takes it on the credit of the indorser, and subject to all the (s) equities with which it may be incumbered." Thus, where the defendant made a promissory note for the accommodation of the payee, and the payee indorsed it, overdue to A., and A. indorsed it to the plaintiff, it was formerly held that, as the absence of consideration would have been a good defence against the payee, it was also available both against A. and the plaintiff (t). It now, however, seems that the original absence of consideration, in the case of accommodation acceptances, the object of which is to raise money, will not defeat the title of an indorsee for value of an overdue bill or note, even al (a) O'Keefe v. Dunn, 6 Taunt. 305; 1 Marsh, 613, S. C.; affirmed in the K. B., 5 M. & S. 282; and see Whitehead v. Walker, 11 L. J., Exch. 168; 9 M. & W. 506, S. C., and Bartlett v. Benson, 14 M. & W. 733; 3 D. & L. 274; 15 L. J., Exch. 23, S. C. (r) It is apprehended that wherever it is alleged that a bill was indorsed when overdue, or under any other peculiar circumstances, it lies on the party averring the fact to prove it on the general principle, Ei incumbit probatio qui dicit." See post. (8) In Sturtevant v. Ford, 4 M. & G. 101, Cresswell, J., says, "Perhaps the better expression would be, that he takes the bill subject to all its equities." su maun (t) Tinson v. Francis, 1 Camp. 19; Brown v. Davis, 3 T. R. 80; 7 T. R. 429; sed vide Charles v. Marsden, 1 Taunt. 224; Atwood v. Crowdie, 1 Stark. N. P. 483; Bayley, 6th ed. 161; Chitty, 9th ed. 218; Roscoe, 386. Quare, whether this were at any time the CHAPTER XI. though the indorsee had notice of the fact when he took the A bill or note assigned in due time on the day of pay- The assignee of an overdue bill or note is not affected by an infirmity in the title of an original or antecedent party, if his immediate assignor could have maintained an action. A bill was accepted on a smuggling transaction, indorsed before it was due to a bona fide holder for value, and by the latter indorsed, after due, to the plaintiff. Held, that as the indorser might have sustained an action against the acceptor, so could his indorsee (y). An indorsee of an overdue bill or note is liable to such equities only as attach on the bill or note itself, and not to claims arising out of collateral matters (z). Therefore the indorsee of an overdue note is not liable to a set-off due from the payee to the maker (a). And although the indorsee had notice, gave no consideration, and took the bill on purpose to defeat the set-off (b). Yet it should seem, that where a negotiable instrument is deposited as a security for the balance of accounts, and is afterwards indorsed overdue, in an action by the indorsee against the party originally liable, the state of the account may be gone into (c). And where there has been an agreement for a set-off, the transfer of the bill overdue will not defeat it (d). Where the bill is deposited as a security for the balance of a running account, but at the time when the bill becomes due the balance is in favour of the depositor, and the bill is not withdrawn by him, and afterwards the balance shifts in (u) Sturtevant v. Ford, 4 M. & G. 101; Lazarus v. Cowie, 3 Q. B. 459; and see Stein v. Yglesias, 1 C., M. & R. 565. (a) Byles on Bills, 5th American edition, p. 285. (y) Chalmers v. Lanion, 1 Camp. 383; Fairclough v. Pavia, 9 Exch. 690. (z) Holmes v. Kidd, in error, 28 L. J. 113; 3 H. & N. 891. (a) Burrough v. Moss, 10 B. & C. 558; 5 M. & R. 296, S. C.; Stein v. Yglesias, 1 C., M. & R. 565; 3 Dowl. 252; 1 Gale, 98, S. C. It has been thought that the indorsee would be affected by the set-off if he have notice of it at (b) Oulds v. Harrison, 24 L. (c) Collenridge v. Farquharson, 1 Stark. 259; and see the observations of Mr. Baron Parke on this case in Oulds v. Harrison, ubi supra. (a) This Sean or gua 70 |